Apple iPhone Secrets Unveiled - Will the Gamble Pay Off?
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Creative makes great MP3 players, get great publicity and usually are nicely priced. Apple barely blinked in their direction, but now with Microsoft in the picture with their Zune and a long term marketing strategy that involves rock groups and hundreds of millions of dollars, 70 percent of the MP3 market will definitely reduce over time.
Another problem is the forecast by financial analyst company Bernstein Research that music playing will increasingly move to mobile phones (a forecast I do not agree with). The company believes that people would prefer to have a phone that plays music rather than a portable music player and a mobile phone as two separate devices.
This is the theory of the convergence of products being touted again. The issue with it is that the market for portable media players will actually shrink, so even if Apple maintains their current share (which will be next to impossible with Microsoft breathing down their necks) it will be a share of a smaller market. To stay competitive over the next three to four years (an eternity in technology terms if you remember how quickly Xbox seized the game console market), Apple actually has to aggressively get into the mobile phone market, regardless of how many behemoths rotate between the top three.
The most optimistic scenario is predicted by Prudential Equity Group who claim that the Apple phone will sell seven million units in 2007 and eight million units in 2008. This will see Apple's profits jump by at least ten percent, as long as the worst case scenario does not occur.
Will the Apple Phone compete with the iPod?
Toni Sacconaghi of Bernstein Research is more pessimistic, predicting that the Apple phone will cannibalize the iPod's sales (Apple would actually have created competing products). Sacconaghi believes that the best case scenario would be the Apple phone replicating the RAZR's success and not feeding on the iPod's sales. Nonetheless the move to the mobile phone cannot be resisted, or Apple might just miss the convergence boat, since the media player market will slow down unless a miracle occurs. Bernstein Research expects the portable media player market to slow in the next few years, dropping to as low as 16 percent in 2009.
Another realistic scenario was put forward by Jupiter Research's Ian Fogg. Fogg believes that the iPhone will be a standalone device that will accept a standard SIM card. It will simply be a portable media player with cell phone functions (no bells and whistles). Diehard Mac fan Leander Kahney (and editor over at Wired) ponders the possibility that the phone may never see the light of day, and go the way of other Apple products that were designed but never rolled out commercially.
As for me, I believe in divergence. Let MP3 players be MP3 players and mobile phones be mobile phones, and may the twain never meet.
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